London copper sinks to seven-week low on dollar, Escondida talks

MELBOURNE: London copper fell on Thursday after solid U.S. jobs data increased the likelihood of an interest rate hike this month and on signs that a disruption at the world's biggest copper mine may soon ease.

U.S. private sector job growth recorded its biggest increase in more than a year in February amid a surge in construction and factory hiring, suggesting the economy remains on solid ground despite an apparent further slowdown in the first quarter.

That pushed up the dollar close to its strongest level this year, eroding the purchasing power of those paying for commodities in other currencies.

"A Fed rate hike after the strong U.S. job report may strengthen the dollar, hitting copper, which is denominated in dollars," Argonaut Securities said in a report.

"(But) underlying fundamentals continue to reflect increasing demand and supply shortages. Therefore, we think any pullback in copper prices will be short-term and providing a buy-the-dip opportunity."

London Metal Exchange copper fell 1.1 percent to $5,701 a tonne by 0708 GMT, after ending a tad lower in the previous session. The metal earlier touched $5,688, its lowest since Jan. 19.

Shanghai Futures Exchange (ShFE) copper futures fell 1.7 percent to 46,400 yuan ($6,710) a tonne.

Supporting copper prices, spot processing fees in Asia for copper concentrate have slid to their cheapest in four years as shutdowns at the world's top two mines in Chile and Indonesia grind on longer than anticipated.

However, an end to the disruption at the world's biggest copper mine may be on the horizon, after BHP Billiton, said it may try to restart production at Escondida in Chile using temporary workers once the strike surpasses 30 days.

LME nickel eased 0.8 percent, while ShFE nickel tumbled 5.5 percent on the possibility that the Philippines' hardline environmental minister may not be confirmed by Congress, opening the door to a new minister who may be more permissive of the mining sector.

But Regina Lopez said on Thursday that President Rodrigo Duterte would reappoint her if a decision is delayed, giving her more time to press her case on mine closures.

LME zinc succumbed to technical selling after it broke its 100-day moving average, sliding 2.2 percent to $2,651 and dragging LME lead down 1.8 percent.

On the demand side, a trade deficit in China for February has reinforced the growing view that economic activity in China picked up in the first two months of the year, adding to a global manufacturing revival.